What does the Consumer Price Index (CPI) measure?
A. The total output of goods in a country
B. The income of all employed citizens
C. The average price of a fixed market basket of goods and services
D. The level of money supply in banks
Answer (2)
The correct answer is letter C. The average price of a fixed market basket of goods and servicesThe Consumer Price Index (CPI) is a tool used by the government to track the average prices of goods and services that are commonly purchased by households. Imagine making a grocery list every month with items like rice, electricity, fare, clothes, and medicine. If the total cost of that grocery list keeps going up each month, that means prices are rising—or in other words, inflation is happening.In the Philippines, the Philippine Statistics Authority (PSA) monitors the CPI every month to measure changes in the cost of living. For example, if the CPI increases by 4% from last year, it means you need 4% more money to buy the same items this year. This affects everyone's daily life—from how far your allowance goes to how much your family spends on food or transportation.
The correct answer is: C. The average price of a fixed market basket of goods and services.The Consumer Price Index (CPI) measures the average change over time in the prices paid by consumers for a fixed basket of goods and services, such as food, housing, clothing, transportation, and medical care. It is used to track inflation and the cost of living. CPI does not measure total output (that's GDP), income levels, or money supply (that's handled by monetary indicators like M2).
